WASHINGTON, D.C. – Following the vote by the House of Representatives, Wednesday to expand and make permanent the tax credit for business research, Robert Atkinson, President of the Information Technology and Innovation Foundation (ITIF), releases the following statement:
ITIF praises the House of Representatives for passing this important measure which will have a direct positive impact on the American economy. The Research and Experimentation Tax Credit helps spur additional research to be done in the United States, which increases the productivity and competitiveness of American businesses. In fact, studies have shown that approximately two dollars in research were generated for every one dollar in tax expenditure.
Unfortunately, the current credit has never been made permanent which has made it hard for businesses to plan ahead when investing in R&D. In addition, the U.S. lags woefully behind other nations in terms of R&D tax incentive generosity, ranking just 27th in the world. These factors hamper U.S. innovation capacity and competitiveness at a time when our global competitors are expanding R&D investment and tax incentives for businesses.
We urge the Senate to follow the House’s lead and take up and pass this important measure. Whether or not there is a “pay-for” for this critical tax incentive is beside the point. As a nation we should be willing to make these kinds of investments in our future without worrying about offsetting budget savings. This is particularly true for the R&D credit because as ITIF has found the credit actually pays for itself in terms of higher federal taxes.